Awdrev,
I had that burning oil smell and it turned out to be a bad actuator gasket on our 07 X3 3.0si. I originally thought it was the vavle cover gasket, once I started removing everything I found out it was the actuator gasket.
Not sure if the 2004 has this though...
Here's the DIY thread I created for it:http://www.bimmerfest.com/forums/sho...light=actuator